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Some adviser platform due diligence falling short

The standard of adviser due diligence on platforms varies widely, according to anecdotal evidence from providers.

It comes as the FCA prepares for a review of investment adviser due diligence in the third quarter of this year, which is set to include scrutiny of platform selection.

Speaking at a Tisa conference in London yesterday Axa Wealth Elevate head of strategic partnership Nick Lee says: “We get lots of requests for information which are very detailed down to the other end of the scale where it is more wishy washy. Some advisers have a very clear idea of processes and their requirements but not all. But most of the stuff I see it as the better end.”

Fidelity head of business strategy and development Ed Dymott: “There are some instances where we see the same report coming through asking exactly the same questions and it is not tailored to that firm. In some cases it seems to be a case of running through that process because you have to do it rather than actually thinking about if it is absolutely right for the business.”

Responding to queries about due diligence on platform choice, Transact chief executive Ian Taylor questioned whether the focus on platform due diligence may be misguided: “What does interest me is why advisers are being asked to do due diligence on platforms but not to the same degree on fund managers or other counterparties. It is an interesting focus on platforms rather than other groups.” 


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 16th May 2014 at 9:22 am

    Meeting the FCA’s criteria for due diligence on 40 platforms is, in my opinion, a battle not worth the effort (and probably not appreciated by the client either, least of all in terms of what it all costs). You simply cannot know the ins and outs and wrinkles and foibles of any particular platform unless or until you actually use it. If you find the one you’ve recommended to be a bucketful of headaches, you then have to go back to your client and, having gone through the DD exercise all over again, explain why you consider they should re-reg everything to what will hopefully be a less troublesome alternative. And what if some of the funds in the portfolio you constructed on Platform A turn out not to be available on Platform B? Another headache. Sorry, Mr Client, Platform A really did appear to be the best one for your particular investment but it’s turned out to be nothing but trouble so we need to switch everything to Platform B, for which I’ll have to do all the work involved without charging you (well, you can’t, can you?) And what if the Platform B throws up a whole different bucketful of headaches?

    I would have saved myself a great deal of grief if I’d anticipated this 18 months ago and gone restricted to one tried and trusted platform from 1.1.13.

  2. @Julian – We pay Defaqto do do our Platform research 6 monthly and then make selections of preferred wraps/platforms which we use to place new clients on in different client segment groups. Doesn’t mean we don’t go off preference and doesn’t mean we automatically move a client off one platform to a now preferred one automatically, each client is different.
    We inherited a client on a platform we didn’t use and I ran with it for nearly 2 years for the client before we both decided it wasn’t working for us (which increases the clients cost) or them.
    Other tings we review quarterly or weekly, but changing platforms is quite major for both client and adviser and should not be a review everytime…..

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